We have an large umbrella policy !

Purchased umbrella insurance policy. 

I'm not in CA so I'll defer to others, but I'd imagine that given the severity of it this would fall under the natural disaster umbrella.

Buy local, self manage, 1 business checking account, 1 umbrella policy, 1 LLC, 1 spreadsheet, Cozy, tenant selection calculus, M2M leases, trusted contractors.

They might need to be segregated out by problem type with some people offered solutions and some people FORCED into solutions.There are also Hobo types that want to live outdoors and beg (by choice).So maybe looking at this as several mini-problems all under one umbrella that need solving might help.Good Luck! 

An LLC is pretty easy but another option is to simply insure it with an umbrella policy.

It can be years of nothing but the easy life collecting rents, no turnover, sipping rum fruit drinks with bamboo umbrellas on tropical islands.... and then BAM!

I think this is where you contact your landlord and umbrella insurance companies and find out if it is a covered claim, as they may be much more knowledgeable about how to handle this situation than you are.  

All money collected in the form of fees or deposits, all fall under one umbrella rule for security deposit money.  

Lawsuits - good management company + umbrella liabilityHigh Vacancy - conservative assumptions in original analysis + cash reservesWhat other risks should I be cognizant of?